MERCANTILE LAW AMENDMENT BILL. (Hansard, 9 June 1856)

THE LORD CHANCELLOR
said, the noble Lord behind him (Lord Overstone) had presented a petition from traders of the city of London, who complained that this clause would tend to prejudice very much their commercial interests. Their Lordships were aware that this Bill had been introduced in pursuance of the report of a Royal Commission which had been instituted in consequence of complaints from Manchester, Glasgow, and various places in the north of England against the present state of the mercantile law. That Report recommended the assimilation of the laws of the two countries, and, as far as regarded personal property, the repeal of the 17th section of the Statute of Frauds. That section provided that no contract for the sale of goods for a value exceeding £10 should be valid unless it was reduced to writing, or unless part of the purchase money had been paid, or part of the goods purchased had been delivered. Now, in the case of land, it was perhaps desirable to require that all contracts should be reduced to writing; but he did not think that it was so in the case of personal property. At present the necessity of reducing contracts to writing was nullified by the provision that the contract should be valid if part of the purchase money had been paid or part of the goods delivered; and, in point of fact, it was impossible to reduce every mercantile contract to writing. It was true that it was said by some of the most respectable merchants, that they entered into contracts through the agency of middlemen or brokers, and, if it were not necessary to reduce these contracts to writing, contracts might be palmed off on them which they had never authorised. Now, he could only say that he believed that if the present Bill became law, the custom would continue the same as it was at present. The fact that in the north of England nine-tenths of the contracts made were not in writing, and that in Scotland there was no law compelling them to be so, afforded a strong presumption that that portion of the Statute of Frauds was really of no practical value; and he trusted therefore, that their Lordships would not 1157 offer any opposition to the present Bill, for by agreeing to it their Lordships would, in reality, be discouraging, not encouraging fraud.

§ LORD OVERSTONE
said, he should not divide the House upon the Bill; but on the part of the merchants of London, he begged to say that the result of the inquiry which had taken place before the Select Committee had only been to strengthen the opinion of the great majority of the mercantile interest in the soundness of the views which they had all along entertained in opposition to this clause. Merchants were persons whose business necessarily led them to enter into contracts of a very extensive and complicated character. For the purpose of coming to that common agreement on which such contracts must be founded, it was obviously requisite that much preliminary conversation must take place; and the danger which the merchants apprehended was, that those inchoate and incomplete conversations would be forced upon them as binding contracts, there being no written memorandum whatever on which to found such obligations. They believed, if such were the effect of the clause, that they would be precluded from that freedom of discussion which was necessary to every satisfactory commercial contract. In order to prove that portion of the case which he thought was in dispute, he had called before the Select Committee the highest mercantile authorities in the city of London, in respect both to character, to the amount of their business, and the eminence of their abilities; but had he been required to establish the whole case, he should have called before that Committee witnesses from every branch of trade in the city of London, all testifying to the like apprehensions arising out of the peculiar nature of the transactions in their respective branches of business. It would be presumptuous in him to attempt to discuss with the learned authorities in that House the legal bearings of the question; but he was bound to say that the merchants and traders of every kind and description to whom he had referred, who were men of great intelligence and ability, were very capable of tracing out the legal bearings of provisions of this nature, and that they were fortified in all their apprehensions by the authority and advice of the professional persons in the city by whom they were usually guided. Moreover, while 1158 they were prepared to bow with great respect and deference to high legal authorities undertaking to declare what the law was and to administer it, they felt considerable apprehension when the same legal authorities came down to determine what the law ought to be, when they found that the reasons and arguments by which those legal authorities were guided, indicated the absence of a sufficient knowledge of the details of the various transactions of business and of the complicated circumstances which belonged to the course of contracts in each respective branch of trade; and at the same time they ventured to think that they were as competent judges as to what forms were applicable to matters of trade and commerce, and as to what dangers and difficulties would arise to commence from the application of particular forms of law, as the highest legal authorities that existed. He had thought it necessary to say thus much by way of caution. In that House it was impossible to contend against the combined legal opinions which undoubtedly existed in favour of the proposed clause: he had discharged his duty in representing the feelings of the mercantile body in regard to this Bill; and he rejoiced, therefore, that it must go down to another assembly, where the mercantile interests were more adequately represented than in that House, and where the objections to the measure would be more ably put forward, and, he believed, with greater effect than they could be in their Lordships' House.

LORD CAMPBELL
said, he had a strong conviction that the Bill would be as much approved of in the House of Commons as by their Lordships, and that by the bulk of the mercantile community the present law was condemned. It did more harm than good; it covered frauds, and did not prevent them. It was an error to imagine that it required contracts for the sale of goods to be always in writing, for it dispensed with it when there was either part payment or part delivery; and necessarily dispensed with it in those cases, for surely if the purchaser had paid his money he must have his goods, or if the seller had delivered the goods he ought to have the price. But these three exceptions ate up the rule, and gave rise to enormous litigation of the very nature it was intended to prevent. Last term the Court in which he presided had been occupied two days on 1159 this question. A horse was bought by word of mouth; and the seller then begged to retain him for a few days, and was allowed so to do. The buyer then refused to receive the horse. The Court held this borrowing of him by the seller equivalent to a delivery, and sufficient to satisfy the statute. The books swarmed with cases of that kind.

§ LORD ST. LEONARDS
remarked, that this showed that the statute had received a large amount of judicial illustrations.

LORD CAMPBELL
At an enormous expense to suitors.

§ LORD ST. LEONARDS
Then the public have paid a large price for the judicial exposition of this statute, and should not be deprived of it just when its construction was settled.

LORD CAMPBELL
It is more unsettled than ever.

§ LORD ST. LEONARDS
No wonder if the Court of Queen's Bench take two days to deal with a trumpery case about a horse, such as we have had described. But decisions on such points had nothing to do with the substance and object of the statute, which applied to land as well as goods, and all the objections urged against the sections applying to goods equally applied to the sections relating to land. And some day it would be said, "Why retain the enactment as to land when it has been swept away with regard to goods?" And were their Lordships prepared to say that verbal bargains should dispose of estates? The argument that delivery or payment was proveable by verbal evidence had no weight, for delivery and payment were facts easily proved, and were different from the terms of a contract, which few persons could recollect accurately. He thought the noble Lord (Lord Overstone) did wisely not to divide the House; but he doubted, with him, the policy of an alteration made against the opinion of the great merchants and traders of the city of London.

§ LORD STANLEY OF ALDERLEY
admitted that the higher class of merchants in the city of London were opposed to the alteration of the existing law; but against that he had to state, that no inconvenience had been experienced from the law of Scotland, which was different from that of England; that the practice of the whole north of England was in conformity with the law of Scotland; and that more than a half of all the pecuniary transactions of England connected with buying and selling were 1160 conducted in defiance of the law, and without the slightest security that the parties would be able to enforce their contracts. Having stated those facts, he thought he had established a case which called for legislation, and laid a ground for asking their Lordships to supply the mercantile classes with a security which they did not at present possess. If they altered the law as now proposed, no person would be precluded from still requiring a written contract, while the great bulk of the mercantile community would be relieved from a difficulty of which they had long complained.